Definition of discount

1. difference between the face value(i.e., future value) and the present valueof a payment.
2. reduction in price given for prompt payment.See also sales discount; trade discount.
3. excess of the par value (face value) of a financial instrument over the price paid for it. See also bond discount.

1. bank loan with interest deducted from the face amount of the note when the credit is extended. Generally used only for short-maturity business loans. The borrower repays the full amount indicated on the note.
2. price difference between a bond's current market price and its stated par value, when the market price is lower.
3. bank discount rate, or a bank's quoted price when it accepts payment liability for a bill of exchange, which then becomes a banker's acceptance.
4. Treasury Department's method of issuing U.S. Treasury bills at less than face value, with redemption at par at maturity. The discount on the bill represents interest.
5. price difference between two currencies, when one is trading at less than par value in relation to another currency.
6. fee charged by a bank for processing and crediting credit card receivables to a merchant's bank account.
7. cash discount offered by merchants for payment in cash. See also deep discount merchant discount rate.

1. difference between a bond's current market price and its face value.
2. manner of selling securities such as Treasury bills, which are issued at less than face value and are redeemed at face value.
3. relationship between two currencies. The Canadian dollar may sell at a discount to the U.S. dollar, for example.
4. to apply all available news about a company in evaluating its current stock price, for instance, taking into account the introduction of an exciting new product.
5. method whereby interest on a bank loan or note is deducted in advance.
6. reduction in the selling price of merchandise.
7. percentage off the invoice price in exchange for quick payment.

1. difference between a bond's current market price and its face or redemption value.
2. manner of selling securities such as treasury bills, which are issued at less than face value and are redeemed at face value.
3. relationship between two currencies. The French franc may sell at a discount to the English pound, for example.
4. to apply all available news about a company in evaluating its current stock price. For instance, taking into account the introduction of an exciting new product.
5. method whereby interest on a bank loan or note is deducted in advance.
6. reduction in the selling price of merchandise or a percentage off the invoice price in exchange for quick payment.

reduced price from a stated rate or list price, usually offered to a customer as an incentive to make a purchase. There are many different kinds of commercial discounts, but generally they fall into four categories: (1) trade-given to intermediaries in exchange for services they perform (such as storage or handling); (2) quantity-given to encourage bulk purchasing, whether in product or service, or in time or space; (3) incentive-given to encourage payment within a specific time period (for example, 2% off the bill if payment is made within 10 days); (4) seasonal-given to help level the production and marketing workload on seasonal merchandise (such as bathing suits, lawn furniture, gardening tools, or Christmas items) when the merchandise is out-of-season. Some discounts are offered in reaction to competitive advertising, as when a soda company offers increased volume discounts to retailers in response to a competitor's challenge campaign. Additionally, many gasoline companies offer discounts to consumers who pay with cash instead of credit cards.

the difference between the face amount of an obligation and the amount advanced or received.

Example: Abel sells land for $100,000 and receives a $60,000 mortgage at 7% interest as part of the payment. Abel then sells the mortgage (the right to collect payments on the mortgage) at a $15,000 discount, thereby receiving $45,000.